Deepwater Horizon Disaster: Blowout, Oil Spill, Litigation, and Changes in the Industry Presenters: Gwen E. Richard, Esq. Jason Sharp, Esq.
Mobile offshore drilling unit or MODU Self-propelled, dynamically-positioned, semi-submersible Entered service in 2001 Deepwater Horizon Capable of drilling up to 35,000 feet deep at a water depth of 10,000 feet Successfully drilled 50 wells in the Gulf of Mexico
Deepwater Horizon Parties BP Leaseholder/Operator who contracted with Transocean to drill the Macondo well Transocean Owner of Deepwater Horizon and employed the crew Halliburton Contracted with BP to provide cementing and mudlogging Cameron Manufactured the BOP
Deepwater Horizon Parties (cont d) M-I, LLC Service provider MOEX Co-Lessee with BP Anadarko Co-Lessee with BP Weatherford Service provider Dril-Quip, Inc. Service provider
Location of Deepwater Horizon
Drilling the Macondo Well The Well from Hell Increasingly fragile sandstone Drilling with narrow or nonexistent margin Multiple kicks and shut-in Multiple lost returns incidents Drilled extra 100 feet with no margin and called total depth at 18,360 feet, leaving the wellbore in an extremely fragile condition
Drilling the Macondo Well (cont d) Large amount of debris in the well when production casing was set Debris compromised the production casing, leading to incorrect placement of cement and in turn permitting hydrocarbons to enter the well on April 20, 2010 The decision to drill the final 100 feet was the initial link in a chain that concluded with the blowout, explosion, and oil spill
Production Casing Issues Plan to set production casing, then temporarily abandon the well Selected long string production casing for the well (extends continuously from wellhead at seafloor to bottom of the well) Did not cause or contribute to the blowout
Production Casing Issues (cont d) Due to fragile wellbore, significant amount of debris in the well when production casing was run Debris flow up inside the casing Bottom of the production casing was set into debris at bottom of the well Substantial compressive force caused it to buckle
Failed Float Collar Conversion A valve used to prevent unset cement from u-tubing and flowing back into the casing Float collar also serves as a landing profile for plugs as a part of cementing Float collar was run in unconverted mode Debris blocked the flow path
Failed Float Collar Conversion (cont d) Nine attempts over the course of two hours to clear the blockage and convert float collar Rapid depressurization on the ninth attempt; circulating pressure was significantly lower than predicted Float collar did not fully and properly convert on April 19, 2010 or anytime thereafter
Failed Float Collar Conversion
Shoe Track Breach Breach or opening in the casing during ninth attempted conversion Cement pumped through the breach in the casing Hydrocarbons entered well casing through the breach Cement bond log (CBL) was not performed
Shoe Track Breach (cont d) CBL would have given a clear indication that the cement was placed improperly and would not provide a barrier to flow CBL would have shown that the top of cement was not where it should have been The decision not to run CBL was a substantial cause of the blowout, explosion and oil spill
Shoe Track Breach (cont d)
Misinterpretation of Negative Pressure Tests The most safety-critical test run prior to removing the BOP Simulates hydrostatic condition on the well Confirms integrity of the entire system Pass-Fail test
Misinterpretation of Negative Pressure Tests (cont d) Initially conducted on the kill line, rather than the drill pipe Declared a success despite pressure on drill pipe If the two tests had been correctly interpreted, the incident would have been averted Substantial cause of the incident
April 20, 2010 9:00 pm to 9:51 pm Final displacement Anomalies Pressure spike Blowout, ignition, explosion Failure to timely shut in the well Diversion to the mud-gas separator Well monitoring hindered by simultaneous operations
Blowout Preventer (BOP) Functions and Configuration Improper maintenance effect on AMF: BSRs not closed Had AMF functioned, BSRs would have sealed the well Failure of subsequent attempts to operate the BOP with ROVs
Source Control Methods BOP numerous attempts to close shearing rams using ROVs LMRP numerous attempts to close using ROVs Cofferdam Top kill/junk shot/momentum kill Top hat Riser insertion tube tool
Capping the Well
Spill of National Significance
Unprecedented in Size and Complexity
Lawsuits Largest lawsuit in history 3,000 cases in federal and state courts across the nation 100,000 named claimants MDL in New Orleans Federal Court Wide array of claims asserted Wrongful death Personal injury Damage to property and natural resources Economic losses
Phase One Trial Trial between February 25, 2013 and April 17, 2013 Addressed everything from the beginning of the well to the blowout Fault determinations
Ultimate Fault Allocation/Degree Each defendant s conduct found negligent and a legal cause of the incident In addition, BP s conduct found grossly negligent Transocean and Halliburton conduct found negligent Fault Allocation Percentage of total liability: BP BP: 67% Transocean: 30% Halliburton: 3% Transocean Halliburton
Phase Two Trial Trial from September 30, 2013 to October 18, 2013 Source Control Issue: acts/omissions relative to stopping discharge BP found not grossly negligent in source control planning and preparation BP s flow rate misrepresentations did not delay source control No alteration to Phase One decision
Phase Two Trial (cont d) Quantification Issue: amount of oil actually released Found 4 million barrels of oil released from reservoir For purposes of calculating maximum possible civil penalty under the CWA, found discharge of 3.19 million barrels of oil
Penalty Phase Trial Trial held between January 20, 2015 and February 2, 2015 Issue: amount of Civil Penalties to be paid by Anadarko under the CWA (BP settled)
BP s Total Liability Over $62 billion $62,000,000,000.00 Includes civil penalty of $5.5 billion under the CWA Includes $7.1 billion to the United States and the five Gulf Coast states for natural resource damages Includes $4.9 billion to settle economic and other claims by the five Gulf Coast states Includes civil settlement with Gulf Coast residents and businesses of $10.3 billion
Changes in the Industry Moratorium New U.S. Well Control Rule (81 FR 25887) Enacts recommendations of Deepwater Horizon Commission Makes mandatory certain practices recommended by the American Petroleum Institute Most provisions effective July 28, 2016, but some phased in over several years
Changes in the Industry (cont d) Major provisions in new rule (81 FR 25887) BOP systems equipped with both drill pipe-centering technologies and dual shear rams Rigorous third-party certification of shearing capability Sets expectations for safe drilling margin Additional requirements for using ROVs to function certain components on BOP Reporting of safety equipment failures to address potential systemic problems in early stages Adequate centralization of casing during cementing
Changes in the Industry (cont d) Marine Well Containment Company (MWCC) July 2010, Shell, Chevron, ConocoPhillips, and ExxonMobil committed to providing a new containment response capability for Gulf of Mexico Containment System includes two Modular Capture Vessels (MCVs), enhanced Subsea Umbilical, Risers, and Flowlines (SURF) equipment, three capping stacks, and additional ancillary equipment
Changes in the Industry (cont d) Includes capping stack as MWCC centerpiece Built for use in deepwater Gulf of Mexico in water depths from 500 feet to 10,000 feet, temperatures up to 350 degrees Fahrenheit, and pressures up to 15,000 psi Capacity to contain up to 100,000 barrels of liquid per day and handle up to 200 million standard cubic feet of gas per day Ready-to-deploy state
Takeaways Indemnity Understanding technology Witness preparation Email discipline Preserving evidence/spoliation
Deepwater Horizon